This paper employs incentive theory and the concept of price discovery costs to offer a theoretical model and empirical evidence on the differential incentive effects of the two alternate organizational forms on the intertemporal quality of hogs in the production-processing stage of the pork value chain. The analytical results reveal that the net value of long-term contracts compared to spot markets increases when pork packers face difficulties related to the discovery and timely dissemination of optimal incentive prices for procuring certain quality attributes of hogs. Taking advantage of bundling a series of transactions and initiating lock-in relationship, the hog buyers find a way to economize on the costs of information incurred otherwise. It sheds light on how costly it is to discover an optimal price when the price should be determined beyond market demand and supply quantity dimensions, and thus informs the evolution of modes and design in organizing a particular transaction, which are distinguished from transaction cost considerations which emphasize safeguards against hold-up or misrepresentation incentives based on asset specificity or measurement imperfections. Second our theoretical and empirical exercise offers a novel method to measure the differential incentive effects of long-term procurement contracts versus spot transactions, which are rarely found in the existing literature. Based on behavioral models that capture key characteristics of distinct incentive structures across spot markets and two types of contracts, our analytical results account for why different organizational forms result in different economic outcomes, not merely describing them. However, the aggregate nature of the data precludes us from systematically controlling any noise factors from measuring the incentive effects, which may reduce the robustness of our empirical results.